Broadband Additions Help Comcast Q1 Results
Comcast continued to take broadband market share during Q1, adding about 439,000 net broadband accounts, the company said Wednesday. That’s about twice as many as Verizon and AT&T added during the same period combined, in a footprint of about half the size of the two largest phone companies’ service areas, Sanford Bernstein analyst Craig Moffett wrote investors. Comcast lost about 37,000 video customers during the quarter, worse than analysts expected. The company pointed to a rate hike it put in place during the quarter as one explanation.
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"Without the increase we would have had better net gain numbers, but it’s great to have this rate increase event behind us,” Neil Smit, president of Comcast’s cable division, said during the company’s quarterly earnings teleconference. Moffett noted the results “came in a quarter when the content companies showed clear and obvious signs of stepping back from the brink of online distribution, helping convince even skeptics that the online video threat was never quite what it was cracked up to be."
Comcast is also looking to technology to boost the attractiveness of its video business. Its forthcoming cloud-based set-top box and software, dubbed X1, will debut in a major market in weeks, CEO Brian Roberts said. After that the company will begin to roll it out more broadly, he said. “It begins to show the two-way network has tremendous advantages over some of the one-way networks like satellite.” The software will also work on third-party devices, which the company refers to as COAM or consumer-owned-and-managed. Initial test results in Augusta, Ga., have been encouraging, Smit said: Customers “get on the product and they begin to use it more and more."
The company has no plans to introduce usage-based pricing for broadband, Smit said. “Our goal is to provide the best high-speed data experience,” and Q1 results imply that the company has been achieving that goal, he said. “We review various forms of pricing and structures all the time, we put the instrumentation in place should we go to a different form of pricing."
Discussing the proposed AWS license transfer among SpectrumCo, Cox and Verizon Wireless, Comcast Chief Financial Officer Michael Angelakis said the parties are optimistic the deal will be approved this year. “We're very optimistic we'll get the transaction closed in the latter part of the year,” he said. Verizon Wireless is buying the licenses from companies that also include Time Warner Cable and Bright House Networks.
Results at NBCUniversal are improving, but the company still has a lot of room for growth, said Stephen Burke, NBCU CEO. The company’s broadcast assets, including the network and stations, are still underperforming peers, though results have stabilized, he said. There are “hundreds of millions of dollars’ worth of opportunity just getting to average in that business,” he said. Comcast Q1 sales gained 23 percent from a year earlier to $14.9 billion. Free cash flow gained 36.8 percent to $3 billion. Profit increased 39 percent to $1.2 billion on higher sales.